Earlier this year we purchased two long-term rentals for cash and renovated them. We have about 550k of our liquidity tied up in these two homes which depleted a good bit (maybe 70%) of our cash reserves. They are now leased making solid returns 325k at 8.5% COC and 225k at 11.25% COC netting around 50k a year. Now I am trying to recoup some of the capital to reinvest or live off of in the event of a job layoff(which seems eminent). I like having the high cash flow by not having a mortgage but also like the peace of mind having the 550k back in the bank.

When I purchased them in Feb my intent was to cash out refi them ~4-5% on a 30yr with them still cash flowing but I was not expecting rates to almost double wiping out most of the cash flow. I’ve searched far and wide for a heloc on an investment property HELOC in Georgia and only found one lender with some pretty crazy terms.

We currently have about 350k in equity in our primary home that we can tap into at 90% LTV with a 8.5% heloc so I could have access to about a 250k line there which would give some breathing room.

My thoughts are to have access to the capital to purchase more investment properties for cash when the right opportunity arises, but I don’t want to do a cash out refi to just have the money sit idle. I’d be paying 7% interest to have inflation erode the money at 7%, a double whammy, which is why I prefer the heloc. My main concern there is the bank closing the line down or reducing it in the event of a market decline. Which I think is fairly likely. At which time the rentals would be worth less and debt availability more unattainable.

Thoughts or suggestions?